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Buy To Let Mortgages For New Builds

Expert advice from the buy to let mortgage experts in finding competitive, affordable mortgage financing for new-build buy to let investments.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Why You Should Choose a Buy-To-Let Mortgage For Your New Build

New-builds can be an attractive proposition, with a new home often needing minimal maintenance, and coming ready to move into.

Many landlords also prefer to invest in new-builds as a buy-to-let property, with the lower costs required to maintain the residence, making it a more profitable proposition than an older home

Revolution Brokers are experienced in the new-build property market. We work with clients both selling, buying and developing new properties to ensure that your mortgage lending offers you the most competitive deals on the market.

Let's take a look at investing in a new-build property, how mortgages for this type of buy-to-let work, and the key considerations to keep in mind.

If you need more detailed support, or tailored advice to support your portfolio expansion or first rental investment property, give us a call on 0330 304 3040 or drop us a message at [email protected].

We'll get you on the right track to securing the mortgage lending you need.

Is It Easy to Get A Buy to Let Mortgage New Build Borrowing Facility?

Mortgages are available for all types of property, including new-builds.

Some mainstream lenders shy away from this side of the market, in which case your best bet is to use a mortgage provider who is experienced in new-build properties.

Buy to let new homes offer a range of benefits to investment landlords:

  • They are energy-efficient and cheaper to run.
  • There is less maintenance work required.
  • Most properties won't require any development or refurbishments.
  • They can immediately start generating rental income.

Some investors purchase buy-to-let properties off-plan. That means buying from the developer or the builder before the property has finished being built.

This option can be cost-effective, since the property may increase in value in the time between the investment and the building work being finished, and also because many developers offer discounts.

They have the benefit of having an upfront investment to cover some of the construction costs, and the landlord often receives a discount of up to 5%.

However, there are risks to buying off-plan since the development won't have yet been completed. You are dependent on the construction finishing on time and being to the expected quality.

There is also the potential that property prices could dip before the building work has completed.

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What is the Difference Between a BTL Mortgage and a Buy to Let Mortgage New Build?

The main difference between a standard buy to let mortgage and one against a new-build property is which lender you approach.

Specialist lenders offer more attractive rates and are more likely to be able to provide a mortgage against this sort of investment.

Many new-build BTL mortgages have a higher deposit requirement, with around 35% being the average. This compares to a standard buy-to-let mortgage deposit of approximately 15% as a minimum.

Some lenders in this sector prefer to lend to borrowers who have experience as a professional landlord since this reduces their risk.

That doesn't mean to say that a new investment landlord cannot buy a new-build rental property, but that it is essential to work with a specialist mortgage broker who can advise on the most suitable lenders for your borrowing requirements.

How Does Affordability Work for New Build Buy to Let Mortgages?

Every mortgage lender has to assess affordability before they can offer you a mortgage, and for new-builds, this works just like for any other property investment.

The affordability assessment looks at how much rental income the new-build is expected to generate and how viable the investment is.

What Do I Need to Earn to Apply for Buy to Let Mortgages for New Build Flats?

Most lenders will look for a projected rental income of between 125-140% of the monthly mortgage payments.

Some lenders also have minimum income requirements, whereby they only consider applications from landlords who can demonstrate a personal income level of at least £25,000 per annum.

What are the Criteria for a Buy to Let Mortgage for New Builds?

There are a few differences in buy to let mortgages for new builds, mainly that you'll usually need a higher deposit and that you are best working with a lender who has experience in this part of the property market.

You'll also find that the usual eligibility criteria apply, which vary between lenders.

Factors they will consider include:

  • Whether you have a bad credit history.
  • If you are retired or working full time.
  • Whether you work for an employer or are self-employed.
  • If the new build property is non-standard in any way.

If any of these apply, give Revolution Brokers a call. It is always possible to secure mortgage lending, but it is essential to apply to the right lenders who are comfortable offering lending where unusual circumstances apply.

How is Profitable Are Buy to Let Mortgages for New Build Flats as an Investment Opportunity?

A lot of new-build developments consist of multiple residential properties, in the form of apartments or flats. The key consideration when determining if your investment is worthwhile is looking at long-term rental yields and the stability of the rental market in your chosen area.

Some new-builds might be constructed in areas where housing for low-income tenants is in high demand, in which case you wouldn't expect to receive a high rental income.

Indeed, sometimes new-build rental yields can be as low as 3-4%, which makes them less attractive as a buy-to-let investment property.

It is vital to understand the figures involved, to make sure that your rental income covers:

  • Running costs
  • Maintenance fees
  • Mortgage interest
  • Letting agent charges

How Can I Know if a Buy to Let Mortgage for New Builds Will be Worthwhile?

Typically, new-builds don't appreciate faster than any other property. Therefore, it isn't the case that any new-build investment will automatically result in higher profits or returns than any different kind of property investment.

However, most properties appreciate slowly and gradually over time.

It's also worth bearing in mind that a new-build won't remain 'new' for long, and therefore will rapidly become an established property without the selling point of being newly constructed.

While it is unlikely to depreciate quickly, it is vital that you ensure you are buying for a reasonable price, and that the investment is profitable long-term.

Professional Advice with New Build Buy to Let Mortgages

The critical factor is to work with an experienced mortgage broker who is used to working with investment landlords and has a network of lenders who are comfortable lending against new-build rental properties.

Revolution Brokers are an established market expert, and wholly independent so have access to all mortgage products and lenders, including new mortgage deals as they are released onto the market.

Finding the Best Buy to Let Mortgages New Build Flat Investment

If you are considering investing in a new-build buy to let, get in touch today at [email protected] or give us a call on 0330 304 3040, and we'll get the ball rolling.

As a whole-of-market broker, we work with a broad network of lenders offering broker-exclusives and negotiating competitive rates to ensure your new build buy to let investment produces the best possible returns.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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